According to a recent ECB estimate, the GDP costs of adopting these changes in Europe are moderate and transitory, while the gains will help increase the economy’s resilience to unfavorable shocks in the long run.  The benefits also extend to the banks’ own private profits

Speaking at the Eurofi High Level Seminar, Mr Pablo Hernández de Cos, head of the Basel Committee on Banking Supervision, emphasised the need for rapid implementation of Basel III reforms by Countries.

He stated that Basel III has not been implemented since the Committee announced its reforms in late 2008, and different reasons for not doing so have been presented.The list of justifications presented over the last 15 years has grown to include economic headwinds such as national elections, the pandemic, geopolitical changes, and, perhaps most ironically, concerns about the fragility of banks.

Mr Pablo highlighted that waiting for the right time to adopt Basel III is akin to waiting for Godot. Though there is a need to guarantee that authorities and banks have adequate time for implementation of standards, it cannot be indefinite.

The last element of the non-implemented Basel III rules are projected to be implemented by 2028, which is 20 years after the Great Financial Crisis of 2008. Banks have had plenty of time to strengthen their resilience through retained profits, liquidity buffers, and other portfolio and strategy changes.

The data is becoming apparent that the remaining Basel III changes will complement past reforms in having a positive net impact on the economy, notably in Europe.

According to a recent ECB estimate, the GDP costs of adopting these changes in Europe are moderate and transitory, while the gains will help increase the economy’s resilience to unfavourable shocks in the long run.  The benefits also extend to the banks’ own private profits.

Mr Pablo highlighted the need of member states implementing the outstanding Basel III criteria fully, uniformly, and as quickly as practicable. Many Central Banks have already done so and are reaping the benefits of stronger financial systems.

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